At a prior company, one of the only reasons we adopted anything SaaS was that IT didn't have to know it existed.
I'm a security person. I often work with my customers' central IT. I'm not going to have an opinion or judge you, but consider:
You're giving people nightmares. I've seen it go very wrong (front-page news wrong). And then the threads commenting on "how incompetent can they be, blabla". I've worked with the people stressed, sad and disappointed that they got pwned because of shadow IT. It's a ticking time bomb.
The cloud wont save you from shadow IT's insecurities. In two years, when you switch to another SAAS provider, or the domain changes, and the enterprise app is left in your azure subscription, and the baddies notice... Then you'll call me or someone like me, and I can earn my paycheck :)
In the former case there was high turnover (replace the team in 1.5 years) and in the latter cases there was high turnover coupled with a problem more than a month away not being considered a problem. So in the former knowledge poured out the door and in the latter knowledge poured out the door and nobody had an interest in anything beyond the quarter, so you do what gets you to the next review cycle.
Basically in both cases the bomb does not matter as you either probably won't be there when it goes off or it doesn't matter as you miss your quarterly goal instead.
We need software to do X.
Call IT, they give you software that sort of does part of X, but it's some enterprise garbage where you quit your job if you have to use it.
Call IT and tell them that's not a good solution. We have this other realistic solution instead.
IT, not wanting to be bothered, laughs and hangs up the phone. Sometimes they'll throw in an excuse that everyone knows doesn't make any sense.
The workers that need to do their job pay for an actually working solution out of other funds (or use their personal software).
Things go wrong and they call you. It's the ineffectiveness of IT to help people get their work done that's the source of the problem.
The way I read shadow IT is as the requirements analysis central IT hasn't done. People aren't taking on all of that extra expense because they want two jobs, they're doing it because central IT is making it hard to do their jobs. When security policies conflict with productivity, it has a direct cost from inefficiency but often a greater one by training people to think of central IT as an obstacle to be bypassed rather than an ally. That inevitably causes other problems and takes a considerable amount of work to improve.
Who cares about front-page news wrong lol. Equifax was front-page news wrong, and there were 0 actual consequences for people in it.
I'm sure that breach was expensive to Equifax internally, but as you say 0 external consequences mean, what company will change their ways...?
If you put someone in business into the position of choosing between getting their job done/making money and adhering to a set of IT/Security rules, I can tell you which one they'll take :)
How do you avoid this? Well it's not easy and it's not cheap. The most important part is ensuring that IT isn't treated like an expense, but an enabler. then you work with your business teams to make sure they have the services they need to get the job done, as safely as possible.
Security teams shouldn't be blockers, but advisors. for this to work, it needs to be acknowledged that the business leaders own the risks ofc.
That's massively easier to write than do, but from what I've seen of various companies, it's pretty much the only way to have a chance of doing things without huge amounts of shadow IT.